Review the effect of Management Ability on the Financial Distress, with an emphasis on Financial Flexibility in Tehran Stock Exchange listed companies

Management ability is one of the influential variables on financial performance and continuity of activity, which can lead to higher efficiency and productivity. Considering the significant impact of management ability on company’s performance, investment and cash creation, and considering the importance of the company's liquidity role in its financial status, management can increase the company's flexibility to keep company Financially safe. The purpose of this study is to investigate the mediator role of financial flexibility in explaining the relationship between management ability and financial distress of 104 companies listed in Tehran Stock Exchange during 2010-2016. To test the hypotheses Panel data regression and logistic regression and for mediation recognition Sobel test has been used. The results showed that there is a positive and significant relationship between management ability and financial flexibility. In addition, the results indicate a negative and significant relationship between management ability, financial flexibility and financial distress and the results of the Sobel test indicate that financial flexibility does not play a mediator role in explaining the relationship between management ability and financial distress. In the other words, while financial flexibility is an important element which affect the financial performance of companies, it can not be regarded as a mediator between the management ability and financial distress.